Real sector’s growth optimism constrained by lingering challenges
Indeed, latest report on the monthly business expectations survey conducted by the Central Bank of Nigeria (CBN) also showed that firms expect the Naira to appreciate in the current and next months; inflation rate to fall in both months; and borrowing rates to rise in the current month and fall in the next month.
Specifically, the firms surveyed within the period under review, identified insufficient power supply, high interest rate, unfavourable economic climate, financial problems, unclear economic laws, insufficient demand and unfavourable political climate as the major factors constraining business activities.
Based on these lingering challenges, the respondent firms, comprising small, medium and large organisations covering both import- and export-oriented businesses, expressed less optimism on the macro economy in July 2018 when compared with the level recorded in the preceding month.
Speaking on some of the constraints in the business environment, the Lagos Chamber of Commerce and Industry (LCCI) said the gridlock in the Apapa axis of Lagos State has imposed and continued to impose unbearable cost on businesses, as the dysfunctional state of the ports and associated logistics for cargo clearing has become a nightmare.
“The cost to business is horrendous. This includes the astronomical increase in haulage cost, increased interest cost (borrowed fund) used for import transaction, high demurrage charges, high insurance premium of vessels coming to Nigeria, high shipping cost, low capacity utilization due to problem of access to raw materials from the port as well as traffic congestion which has extended to the metropolis from the ports, paralyzes of economic activities in Apapa axis and many more.
“What we are witnessing today is a reflection of the several years of neglect of our ports and other infrastructure.
We need to urgently restore order and sanity to the Lagos ports and improve access to them.
It is regrettable that Lagos ports which are major sources of Customs revenue had to suffer the kind of deterioration and challenges that is currently taking place”, LCCI President, Babatunde Ruwase added.
The LCCI noted that improvement in crude oil prices and output, CBN Monetary policy tightening, liquidity in the foreign exchange market and rising foreign reserve are the major drivers of the downward trend of the price.
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